Andor Retirement Fund · CAS-12698-H6X8

CAS-12698-H6X8

Ombudsman’s Determination Applicant Ms N

Scheme Andor Retirement Fund (the SIPP)

Respondent Hornbuckle Mitchell (Hornbuckle)

Outcome

Complaint summary

• There was delay, incompetence and maladministration by Hornbuckle following her request to transfer the SIPP.

• Hornbuckle failed to issue invoices and alert her about missed rental payments, for the property held within the SIPP (the SIPP property), or the potential consequences.

• Hornbuckle failed to notify her that Stamp Duty Land Tax (SDLT) was payable on the lease for the SIPP property, or that the lease needed to be registered.

• The receiving pension provider, Mattioli Woods, told Ms N there was no reason for the transfer delay, as it was willing to accept the SIPP, despite the outstanding issues.

Background information, including submissions from the parties

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“Please also note that there are certain things [the Company] need to do following the completion of the lease including the payment of [SDLT] on the rent of £2,333.00 and the registration of the lease at the Land Registry for which a fee of £190.00 will be payable. If you would like my assistance in connection with these matters, please let me know.”

“Whilst I am not currently acting for [the Company], I know that you are both officers of that Company, so I need to remind you of the email that I sent to you on the 31st October 2012, a copy of which I enclose for your reference. The Company will need to register the Lease (as it has a term of over 7 years) at the Land Registry within two months of its creation and, more urgently, there will be Stamp Duty Land Tax to pay on the Lease, which I calculated at £2,333.00. As I informed you at our recent meeting, this SDLT must be paid to HMRC within 30 days of the start of the Lease so it is now getting very close to being overdue. It is a criminal offence not to pay this tax and there are financial penalties for late payment.”

“I would refer you to my letter dated 29th November 2012, a copy of which I enclose for your reference. I have not received instructions to act for [the Company]. I now enclose the original Lease dated 1st November 2012 and would remind you that there will still need to be a declaration and payment made for [SDLT] purposes. The registration of the Leasehold interest in favour of [the Company] will need to be done as well. It is a criminal offence not to pay [SDLT] so the officers of [the Company] need to address this matter urgently.”

In July 2014, Mr S signed forms to initiate a transfer of the SIPP to Mattioli Woods. As Ms N also needed to sign the forms, these were returned by Hornbuckle in August 2014.

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In December 2014, Hornbuckle forwarded the transfer forms to Mattioli Woods and requested further information from it. Ms N says that Hornbuckle also informed her it was in the process of valuing the SIPP.

From December 2014 to September 2015, there was a series of correspondence between various third parties. In particular, Mattioli Woods’ solicitors were in communications with Lloyds concerning issues around the Company’s lease being unregistered, and unpaid SDLT.

In September 2015, Ms N says Hornbuckle requested, via her financial advisor, that Property sale/Transfer out forms needed to be completed.

On 29 December 2015, Hornbuckle confirmed receipt of the completed Property sale/Transfer out forms.

In January 2016, Hornbuckle asked Ms N and Mr S to confirm they were happy to use its panel solicitors. On 22 January 2016, Morton Fraser was appointed to act on behalf of Hornbuckle.

In February 2016, at Morton Fraser’s request, Hornbuckle sent Ms N and Mr S Commercial Property Standard Enquiries forms to complete. It also chased a response to its outstanding queries.

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“We currently have your complaint detailed as the timeframe [for] transferring the SIPP, including the in-specie transfer of the property, to your new pension provider, and the fees that have been applied whilst this transaction is ongoing.

At present, I understand that loans held with Lloyds Banking Group are currently being assigned to your SIPP with Mattioli Woods and that the in- specie transfer of [the SIPP property] has not yet completed.

As the transaction is still ongoing and you have indicated that you have further issues to bring to our attention, I do not feel it would be prudent to issue a formal complaint response at this time. I feel it would be beneficial to review the complaint detailed above alongside the additional comments you will be outlining once the property has been purchased. I would, however, be grateful if you could confirm you are in agreement with this approach.”

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• In relation to the overall time for the transfer to complete, Hornbuckle confirmed that there was no set timeframe for an in-specie transfer, such as Ms N’s, and that the SIPP’s cash would be transferred last.

• Hornbuckle conceded that there were several occasions where it was responsible for delays. However, it highlighted that the transfer was delayed largely due to other issues such as the unpaid SDLT, the unregistered lease and issues relating to the Loan.

• In relation to the unpaid SDLT, Hornbuckle said it was not responsible for this issue and, in any event, the Company had been informed of the requirement to pay SDLT on the lease by Chubb Law in 2012. Hornbuckle said it had mistakenly told Ms N at one point that it would ensure the SDLT was paid from the SIPP’s funds. It explained that this was because it initially believed the unpaid SDLT related to the SIPP property purchase. However, this was not the case.

• In relation to the unregistered lease, Hornbuckle said it was not responsible for this issue and, in any event, the Company had been informed of the requirement to register the lease by Chubb Law in 2012.

• In relation to repayment of the Loan, Hornbuckle said that Mattioli Woods had confirmed the Loan would need to be repaid before the transfer occurred. However, Ms N had informed it that the Loan would be transferred. It appeared this was not the case, and Hornbuckle understood Ms N had now appointed a financial advisor to help deal with the Loan. Hornbuckle added that, at one point, Lloyds had recalled the Loan and Hornbuckle had assisted Ms N in arranging a grace period for repayment so this did not happen.

• In acknowledgement of its errors, Hornbuckle increased its offer of £250 to £500, for distress and inconvenience caused. It also offered to waive all fees applied to the SIPP from 2015 onwards, as well as Ms N’s and Mr S’ individual SIPPs. Lastly, it confirmed no fees would be applied going forward to any of the SIPPs.

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Summary of Ms N’s position

• Hornbuckle ought to have been aware of the unpaid SDLT and unregistered lease, and it should have informed her so that she could have prevented or resolved these issues.

• Hornbuckle ought to have paid the outstanding SDLT.

• Hornbuckle ought to have made her aware that the SIPP was not receiving rent from the Company.

• She had to become involved in order to ensure the transfer progressed.

• Hornbuckle’s staff were abusive towards her and this is evidenced by the fact it subsequently dismissed a member of staff after he spoke to her rudely.

• Mattioli Woods was willing to accept the transfer even whilst there were rent arrears.

• There were a number of failings by various third parties involved in the transfer.

Summary of Hornbuckle’s position

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Adjudicator’s Opinion

• Hornbuckle acknowledged that it caused some initial delay with the transfer, as it did not specify its requirements to Mattioli Woods at the outset. However, this delay was minor.

• Hornbuckle awarded £500 to recognise the distress and inconvenience caused by these early delays.

• Hornbuckle also realised it had incorrectly applied some fees, which it later refunded, as well as refunding further fees, that had been correctly applied, as a goodwill gesture.

• The majority of the delays were caused by the missed rental payments, Lloyds’ requirement for the Loan to be repaid before transfer, and the fact that the Company had not registered the lease or paid SDLT on it.

• It was the Company’s responsibility to ensure rent payments were made to the SIPP, in accordance with the lease. Hornbuckle cannot be held responsible for the additional delay caused by resolving this issue. In particular, the Adjudicator noted that Ms N had not instructed a property management company, and Hornbuckle does not provide this service. Hornbuckle was also informed incorrectly by Mr S that all rental payments had been made by the Company in early 2016.

• When Ms N decided to transfer the SIPP, and so the SIPP property, Lloyds was within its rights to recall the Loan. Hornbuckle had no control over this.

• It was not Hornbuckle’s responsibility to tell Ms N about the SDLT due or registration needed for the lease. The Adjudicator noted that Ms N’s solicitor informed her about these requirements in 2012 and 2013.

• Ms N acknowledged to Hornbuckle that she did not have the finances to settle the various outstanding payments, but Hornbuckle cannot be held responsible for this.

• Hornbuckle had the right to pause the transfer until the rent arrears were resolved, as these would result in unauthorised transactions incurring fines. As a 7 CAS-12698-H6X8

trustee of the SIPP, Hornbuckle would have been liable for these fines, even after the transfer, so it was reasonable for Hornbuckle to require a resolution to the rent arrears before the completion of the transfer.

• When opening the SIPP, Ms N agreed to Hornbuckle’s fee schedule, and Hornbuckle is entitled to apply such fees while the SIPP is active. In any event, Hornbuckle has refunded all fees it applied from 2015 onwards.

Ms N did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Ms N provided her further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the additional points raised by Ms N.

Ombudsman’s decision

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I do not uphold Ms N’s complaint. If she wishes to accept Hornbuckle’s offer, she should contact Hornbuckle directly.

Anthony Arter

Pensions Ombudsman 18 February 2021

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